Operating profit amounted to USD 79.7 million, which is the best ever quarterly result, and net profit amounted to USD 43.1 million. Prosafe expects a good long-term demand for semi-submersible accommodation rigs, with stable activity in the North Sea and Mexico and growth in deepwater regions.
Financials
(Figures in brackets refer to the corresponding period of 2009)
First half 2010
Operating profit for the first half of 2010 came to USD 119.7 million (USD 84.3 million). Utilisation of the rig fleet was 80 per cent (82 per cent), but the effect of this decline was more than offset by higher day rates.
Safe Caledonia was in operation for Total until mid-June, when an incident during relocation lead to minor damages to the starboard column/pontoon. As a precautionary measure, the vessel was taken to sheltered waters for necessary repairs, resulting in 8 days with loss of day rate and an estimated additional cost of around USD 2 million. Safe Caledonia recommenced operations for Total in late June.
Safe Esbjerg was in operation until mid-February, when the jack-up rig was mobilised to Gdansk to undertake class renewal, steel work and refurbishment. Safe Esbjerg recommenced operations for Maersk in mid-April.
Safe Bristolia was in operation in Mexico until late January before the rig was mobilised to the North Sea. The rig started a charter in the UK North Sea in the beginning of April 2010.
Safe Scandinavia was idle in the first quarter, but commenced operations for Statoil in late April.
Safe Astoria was in operation for Shell until the end of June, and Safe Concordia was idle in the first half of 2010.
All other vessels have been fully utilised in the first half of 2010.
Net financial costs amounted to USD 24.3 million (USD 4.3 million). In the first half of last year there was a significant increase in market value of currency forwards.
Taxes in the first half equalled USD 1.1 million positive (USD 10.6 million negative). This change is due to a reduced tax provision relating to an unrealised currency gain in a Norwegian subsidiary.
Net profit amounted to USD 96.5 million (USD 69.4 million), corresponding to diluted earnings per share of USD 0.43 (USD 0.31).
Total assets as at 30 June amounted to USD 1 364.1 million (USD 1 387.9 million), and the book equity ratio rose to 25.1 per cent (13.7 per cent). Gearing has come down over the last year, with a total debt/EBITDA ratio of 2.7 (3.8) as at 30 June.
Second quarter
Utilisation of the rig fleet was 87 per cent (86 per cent) in the second quarter. Operating profit amounted to USD 79.7 million (USD 46.8 million), which is the best ever quarterly result. This improvement is mainly due to higher day rates.
Net financial costs amounted to USD 11.9 million (net income of USD 4.6 million). The main reason for this change is a significant increase in market value of currency forwards in the first half last year.
Taxes in the second quarter amounted to USD 1.9 million positive (USD 8.3 million negative). This change is due to a reduced tax provision relating to an unrealised currency gain.
Net profit amounted to USD 43.1 million (USD 43), corresponding to diluted earnings per share of USD 0.19 (USD 0.19).
Dividend
The Board of Directors resolved on 25 August 2010 to declare an interim dividend equivalent to USD 0.095 per share to shareholders of record as of 6 September 2010. The shares will trade ex-dividend on 2 September 2010. The dividend will be paid in the form of NOK 0.59 per share on 16 September 2010.
Outlook
Five of the company's rigs are bareboat chartered to Interpetroleum Services, operating for Pemex offshore Mexico. These five rigs have firm contracts as follows: Safe Lancia until December 2012, Jasminia until December 2010, Safe Hibernia until May 2011, Safe Britannia until January 2013 and Safe Regency until August 2013.
Safe Esbjerg is operating for Maersk in the Danish North Sea until June 2011.
Safe Caledonia is operating for Total in the UK North Sea until mid-September 2010. Safe Caledonia has a 9-month contract with BG International planned to commence March 2011.
MSV Regalia is operating for BP in the Norwegian North Sea. The contract with BP has a firm duration until July 2011.
Safe Scandinavia has a firm contract with Statoil, six months that commenced early May 2010 and six months from early April 2011.
Safe Bristolia is on contract with Nexen in the North Sea until the end of September 2010.
Safe Astoria and Safe Concordia are currently idle.
In the North Sea, the majority of the fixed installations is mature and requires greater maintenance and modifications to uphold production and safe operation. Increased recovery and tie-ins of satellite fields to existing installations have extended the lifetime for many fields in the North Sea. Therefore, we foresee a good outlook for modification and maintenance projects over the coming years.
There have recently been a high number of awards for accommodation work in the North Sea for 2011 and 2012. We expect that more offshore projects in the North Sea will require additional accommodation in 2011 and 2012.
The market for semi-submersible accommodation rigs continues to be good in Mexico, where Pemex has high activity offshore in order to keep up production of the Cantarell field. Prosafe currently has five rigs operating in Mexico and we expect a stable development going forward.
There is tender activity in other regions and contract awards are expected in the near future.
Within the harsh and semi-harsh offshore environments where most of Prosafe's accommodation rigs operate, there is a good supply-demand balance and the number of new-builds to be delivered over the next few years is limited.
In summary, we expect a good long-term demand for semi-submersible accommodation rigs, with stable activity in the North Sea and Mexico and growth in deepwater regions.
Risk
Prosafe's main operational risks are the day rate level and the utilisation rate of the accommodation fleet. The company's results also depend on operating costs, interest expenses and exchange rates. These risks are described in detail in the Directors' report in the Annual Report 2009.
Statement from the board of directors and president & CEO
We confirm that, to the best of our knowledge, the financial statements for the first half year of 2010, which have been prepared in accordance with IAS 34 Interim Financial Statements as adopted by the European Union and the requirements of the Cyprus Companies Law, give a true and fair view of the company's assets, liabilities, financial position and results of operations, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph and the Cyprus Companies Law.
Prosafe is the world's leading owner and operator of semi-submersible accommodation/service rigs. Operating profit reached USD 218.6 million in 2009. The company operates globally, employs approx. 400 people and is headquartered in Larnaca, Cyprus. Prosafe is listed on the Oslo Stock Exchange with ticker code PRS. For more information, please refer to www.prosafe.com.
Attachments: Q2 2010 report, Q2 2010 presentation
Larnaca, 26 August 2010
Prosafe SE
For further information, please contact:
Arne Austreid, President and CEO
Phone: +357 992 75 030
Karl Ronny Klungtvedt, EVP Strategy and Corporate Planning
Phone: +47 908 81 657
